SABRA HEALTH CARE REIT, INC. (SBRA): what the price requires
At today's price, SABRA HEALTH CARE REIT, INC. (SBRA) is priced for -4.2% FFO growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-17 · Source: https://boothcheck.com/report/SBRA
Headline
| Field | Value |
|---|---|
| Ticker | SBRA |
| Company | SABRA HEALTH CARE REIT, INC. |
| Current price | $19.78/sh |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | reit |
| Implied FFO growth | -4.2% |
| Price-to-FFO | 14.3x |
| FFO yield | 7.0% |
Solve inputs: computed at a 8.7% cost of equity with 4% terminal growth over a 5-year stage.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | -0.44σ |
| cohort percentile (of 88 peers) | 48 |
| implied end-window share | 0% |
Valuation X-Ray
The price is justified by relative-multiple and growth-DCF; asset-based/earnings-power land below the price.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 3.50x | 4 | expensive |
| Earnings | 2.46x | 4 | expensive |
| Relative | 1.12x | 6 | expensive |
| Growth | 0.86x | 4 | justifies |
Families that justify the price: Relative, Growth Families that call it expensive: Asset, Earnings
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 6.3%); the inversion above states its own rate.
Per-Model Detail (n=18)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | — | — | no | — |
| DCF Exit Multiple | Growth | $25.24 | 0.78x | yes | Exit EV/EBITDA: 36.7x / 38.7x / 40.7x (bear / base = today's held flat / bull), 6yr |
| Relative Valuation | Relative | $23.74 | 0.83x | yes | P/E 26.78x (blended: static sector reference 35x + trailing (TTM) 14x), scenarios: 22.1x / 26.8x / 31.5x (bear / base = reference held flat / bull), EV/EBITDA 25.61x |
| Simple DDM | Growth | $34.26 | 0.58x | yes | DPS $1.18, g=5.6% (sustainable: ROE (TTM) × retention; not the terminal-growth assumption), ke=9.3% |
| Two-Stage DDM | Growth | $21.23 | 0.93x | yes | Stage 1: 3% for 5yr, Stage 2: 3.5% perpetual |
| Simple Excess Return | Asset | $6.60 | 3.00x | yes | BV/sh $10.88, ROE (TTM) 5.6%, ke 9.3% |
| Two-Stage Excess Return | Asset | $4.94 | 4.00x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $14.38 | 1.38x | yes | Rev $0.8B, growth 13% (input: historical growth; tapered), Terminal P/S: 5.1x / 6.2x / 7.3x (bear / base = today's held flat / bull, cap 12x) |
| Peter Lynch Fair Value | Relative | $16.44 | 1.20x | yes | FFO/share $1.37, growth 3% (input: historical FFO/share growth, 10y median), PEG=9.41 (Overvalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | — | — | no | — |
| Residual Income | Asset | $4.73 | 4.18x | yes | BV $10.88 + 5yr PV of (ROE (TTM) 5.6% − Kₑ 9.3%) × BV; BV grows 3.6%/yr |
| Graham Number | Asset | $18.32 | 1.08x | yes | √(22.5 × FFO/share $1.37 × BVPS $10.88) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $5.41 | 3.66x | yes | EBITDA $0.20B × sector EV/EBITDA 20.0x |
| FCF Yield | Earnings | $5.53 | 3.58x | yes | FCF $366.7M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $5.04 | 3.92x | yes | SBC-adj FCF $0.35B (FCF $0.37B − SBC $0.01B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $17.67 | 1.12x | yes | FFO/share $1.37 × (8.5 + 2×3.4%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | — | — | no | — |
| P/Sales Sector | Relative | $19.05 | 1.04x | yes | Revenue $0.81B × sector P/S 6.0x |
| PEG Fair Value | Relative | $7.08 | 2.79x | yes | FFO/share $1.37 × (PEG 1.5 × growth 3.4% (input: historical FFO/share growth, 10y median)) → PE 5.2x |
| Earnings Yield | Earnings | $14.81 | 1.34x | yes | FFO/share $1.37 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | $19.38 | 1.02x | yes | FFO/share $1.37 × 14.2x P/FFO (route cohort median, n=85); FFO $0.35B (FFO incl. D&A + impairments, FY2025, companyfacts), shares 256M |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt (REIT basis) | $2.5b |
| Net debt / FFO | 7.28x |
| Fixed-charge coverage (FFO basis) | 4.1x |
| Funds from operations (trailing) | $349.9m |
| Share count CAGR (dilution) | 2.5% |
| Burning cash | no |
REIT basis: leverage is read against funds from operations (FFO), not depreciation-gutted operating income. The header's implied growth runs on ADJUSTED FFO — FFO minus recurring maintenance capex — so the header's multiple and this leverage ratio use bases that differ by that capex; neither substitutes for the other.
Bullet Takeaways
- At about $18.12 the trust trades near 14x adjusted funds from operations, a multiple so low the price sits below what even a 5%-a-year decline in funds from operations would warrant. The price is pricing erosion, not the growth the recent quarter showed.
- The watch item is leverage and operator credit: net debt about 7.3x funds from operations with fixed-charge coverage of 4.1x, on a portfolio that has been shifting toward private-pay senior housing and away from skilled nursing.
Bull Case
The structural advantage Sabra is building is a deliberate shift in portfolio mix toward higher-quality, private-pay revenue, and the margin data shows it working. Management increased the private-pay concentration to about 50% of the portfolio, a material change from the prior skilled-nursing-heavy mix, which reduces dependence on government reimbursement and diversifies the cash flow (web research). The payoff is in the operating numbers: same-property managed senior housing cash net operating income rose 14.4% in the first quarter of 2026, while expense per occupied room increased only 1.8%, so revenue per available room and occupancy are climbing far faster than costs (web research). That widening spread between senior-housing revenue and expense is the structural lever, and it is the kind of internal growth a low-cost operator captures as the post-pandemic senior-housing recovery continues.
The cash earnings are growing and the dividend is well covered. First-quarter 2026 normalized FFO per share was $0.38, up 9%, and normalized AFFO per share was $0.39, up 5%, with AFFO of $100.1 million versus $88.2 million a year earlier (web research). The $0.30 quarterly dividend represents about a 77% payout of normalized AFFO, leaving a cushion and room to grow the payout. For a healthcare REIT priced at 14x AFFO with a 7.2% AFFO yield, growing cash earnings with a covered, sub-80% payout is exactly the profile that supports the distribution while the portfolio repositions.
The external growth is accretive and the valuation gap is wide. Sabra invested $102.0 million in the quarter and $206.1 million year to date in senior housing and skilled nursing assets at an estimated initial cash yield of about 8.0%, and has been awarded an additional $200 million of higher-yielding opportunities (web research). Buying at an 8% cash yield while the stock trades at a 7.2% AFFO yield is value-accretive spread investing. The market is pricing decline into a trust that is delivering growth.
Bear Case
The balance sheet is the structural constraint, and a healthcare REIT carries a specific fragility: it owns buildings but depends on operators to pay the rent. Net debt is about 7.3x funds from operations with fixed-charge coverage of 4.1x, leverage that is normal for the sector but real, and it sits on a portfolio whose cash flow depends on the financial health of third-party skilled-nursing and senior-housing operators. The 10-K is candid that the risk is whether operators can "fulfill their insurance, indemnification and other obligations to us under their leases" and "make lease or loan payments to us" (accession 0001492298-26-000008). If a major operator hits distress, Sabra carries the debt while the rent stalls, and replacing a failed operator is slow and costly. A peer in the same business, Omega Healthcare, frames the replacement problem precisely: finding a new operator can be "significantly delayed or limited by various state licensing, receivership, certificate of need or other laws, as well as by Medicare and" Medicaid rules (Omega 10-K, accession 0000888491-26-000008).
The operating cost base is the second pressure point on that leverage. The 10-K lists the headwinds plainly: "increased labor costs and labor shortages," "competitive conditions," and the impact of "pandemics or epidemics" on tenants and the managed senior-housing communities (accession 0001492298-26-000008). The senior-housing-managed portfolio, where Sabra takes operating risk directly rather than collecting fixed rent, is the growth engine but also the part most exposed to wage inflation and occupancy swings. A reversal in the senior-housing recovery, or a renewed staffing crunch, would compress the very cash NOI growth the bull case relies on, and the levered balance sheet has limited room to absorb it.
The asset and earnings-power frames flag the tension the bull case glosses. Book value per share is only $10.88, and the asset methods mark fair value at $5 to $7 against the $18 price (June 28, 2026), while return on equity is just 5.6%, below the 8.7% to 9.3% cost of equity, so on a pure excess-return basis the trust earns less than its capital costs. The FFO-anchored marks are high precisely because they capitalize the cash flow at a low cost of equity, but if rates rise or operator credit deteriorates, that cost of equity climbs and the FFO multiple compresses. The price near 14x AFFO is cheap only if the operators keep paying and the senior-housing recovery holds; the leverage is what turns a stumble in either into a sharper move down.
Valuation
The price is read on a real-estate basis against funds from operations. At about 13.1x FFO and 14x adjusted FFO, the AFFO yield is roughly 7.2% and the FFO yield about 7.7%, and the inversion is a bound rather than a solved rate: the multiple is so low the price sits below what even a 5%-a-year FFO decline would warrant, computed at an 8.7% cost of equity. The implied pace is within Sabra's own record and sits in the lower half of the REIT peer group on price-to-AFFO, so the market is pricing in erosion.
The X-ray splits sharply by family. The asset methods anchor on a $10.88 book value and mark $5 to $7, reading expensive because the trust earns a sub-cost-of-equity return on book. The relative and growth methods are far higher: the relative method marks $24.86, the simple and two-stage dividend models $34 to $42, Peter Lynch $30, and the Ben Graham formula $44. The FFO-multiple method marks $18.25 on a cohort-median 13.4x P/FFO. The characterization is that relative-multiple and growth-DCF justify the price while asset and earnings-power say expensive.
The honest read is that on cash earnings the price looks cheap and the embedded assumption is conservative, but the asset frames are a reminder that the trust earns below its cost of equity and carries meaningful leverage. The variable that settles it is operator credit and the senior-housing recovery: if cash NOI keeps growing and operators keep paying, the FFO-range marks near $33 to $39 are credible; if operator distress or a senior-housing reversal hits, the leverage pulls the price back toward the asset-based floor.
Catalysts
The senior-housing recovery is the dominant catalyst. First-quarter 2026 same-property managed senior housing cash NOI rose 14.4% with expense per occupied room up only 1.8%, and normalized AFFO per share grew 5% to $0.39 (web research). Each quarter's senior-housing occupancy, revenue per available room, and cash NOI growth is the readout on whether the recovery sustains the cash-earnings growth.
The portfolio repositioning is the strategic catalyst. Sabra raised private-pay concentration to about 50%, shifting away from skilled-nursing dependence, and deployed $206.1 million year to date at roughly an 8% initial cash yield with an additional $200 million of higher-yielding opportunities awarded (web research). The pace and yield of that capital deployment, set against the stock's 7.2% AFFO yield, determines the accretion.
The risk catalysts are operator credit, reimbursement, and rates. The 10-K flags operator ability to make lease payments, labor cost and shortage pressure, and reimbursement and pandemic exposure as the key risks (accession 0001492298-26-000008). The dividend, at a 77% payout of normalized AFFO, is the signal of management confidence. Watch the senior-housing cash NOI trend, the private-pay mix shift, acquisition yields and pace, operator coverage and credit, and net debt against funds from operations.
Sources: Sabra Q1 2026 results and 10-Q (stocktitan.net, sec.gov 8-K); Sabra Q1 2026 earnings call (fool.com, theglobeandmail.com, finance.yahoo.com, ca.investing.com).
Peer Cohorts (Per Segment, With Filing Citations)
Sabra Health Care REIT (whole company) (reported)
- OHI (OMEGA HEALTHCARE INVESTORS, INC.)
- (no filing in the citation store)
- LTC (LTC PROPERTIES INC)
- (no filing in the citation store)
- NHI (National Health Investors, Inc.)
- (no filing in the citation store)
- AHR (American Healthcare REIT, Inc.)
- (no filing in the citation store)
- DHC (DIVERSIFIED HEALTHCARE TRUST)
- (no filing in the citation store)
- WELL (WELLTOWER INC.)
- (no filing in the citation store)
- VTR (Ventas, Inc.)
- (no filing in the citation store)
- MPT (MEDICAL PROPERTIES TRUST, INC.)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.